Nosocomial infection is a common problem in the Neonatal Intensive Care Unit (NICU) and a knowledge of the pattern of nosocomial infection will contribute greatly to the intensification of infection control measures and the development of antibiotic policies in the NICU. This study aims to compare the incidence and clinical characteristics of neonates with nosocomial infection in NICU of both Kuala Terengganu Hospital (HKT) and Universiti Sains Malaysia Hospital (HUSM). Neonates who had both clinical signs of sepsis and positive blood cultures, 48 hours after admission to NICU, from 1st January to 31st December 1998, in both hospitals were retrospectively studied. Among neonates admitted to NICU, 30 (5.4%) in HKT and 65 (3.6%) in HUSM had nosocomial infection (p = 0.07). The mean duration of hospitalisation was shorter (HUSM 37 days, HKT 49 days; p = 0.02), and the number of neonates with predisposing factors for infection is higher (HUSM 100%, HKT 73.3%; p < 0.001) in HUSM compared with HKT. There were no differences in gestation, mean age of onset of infection and mortality between both hospitals. The most common organism isolated from the blood in HKT was Klebsiella pneumoniae (33.3%), and in HUSM Klebsiella aerogenes (24.6%). Half of Klebsiella pneumoniae isolates were resistant to cephalosporins and aminoglycosides in HKT and a similar number of Klebsiella aerogenes isolates were resistant to piperacillin and aminoglycosides in USM. In conclusion nosocomial infection is a common problem in both hospitals. Except for more frequent predisposing factors for infection in HUSM, and a longer duration of hospital stay among neonates in HKT, the clinical characteristics of neonates with nosocomial infection in both hospitals were similar.